UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant x

Filed by a Party other than the Registrant o

Check the appropriate box:

Ryder System, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

Ryder System, Inc.

11690 N.W. 105th Street

Miami, Florida 33178

NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS

By order of the Board of Directors

Robert D. Fatovic

Executive Vice President, General Counsel and Corporate Secretary

Miami, Florida

March 30, 2005

TABLE OF CONTENTS

RYDER SYSTEM, INC.

11690 N.W. 105th STREET

MIAMI, FLORIDA 33178

PROXY STATEMENT

INFORMATION ABOUT OUR ANNUAL MEETING

ELECTION OF DIRECTORS

(Proposal 1)

Under Ryder’s By-Laws, directors are elected for three-year terms, typically with one-third of the directors standing for election in any given year. The three directors whose terms expire at the 2005 Annual Meeting are Joseph L. Dionne, Lynn M. Martin and Hansel E. Tookes II. Mr. Dionne is retiring from the Board of Directors effective May 6, 2005, in accordance with the Company’s retirement policy for directors. Ms. Martin and Mr. Tookes are nominated for re-election at the 2005 Annual Meeting for a three-year term that expires at the 2008 Annual Meeting, and have each consented to serve if elected.

John M. Berra, Daniel H. Mudd and Gregory T. Swienton are currently serving terms that expire at the 2006 Annual Meeting. David I. Fuente, Eugene A. Renna, Abbie J. Smith and Christine A. Varney are currently serving terms that expire at the 2007 Annual Meeting.

The principal occupation and certain other information about each director and director nominee appears on the following pages.

The Board of Directors recommends a vote FOR the election of each of the director nominees.

NOMINEES FOR DIRECTOR

FOR A TERM OF OFFICE EXPIRING AT THE 2008 ANNUAL MEETING

DIRECTORS CONTINUING IN OFFICE

CORPORATE GOVERNANCE

The Company maintains a Corporate Governance page on its website at www.ryder.com which includes information regarding the Company’s corporate governance practices including the Company’s Corporate Governance Guidelines, Principles of Business Conduct and Board Committee charters. The Corporate Governance Guidelines set forth the Company’s governance principles relating to, among other things, director independence; qualifications and responsibilities; Board structure; director compensation; management succession; and periodic performance evaluation of the Board. The Principles of Business Conduct apply to officers, employees and directors of the Company and cover all areas of professional conduct including conflicts of interest, confidentiality and compliance with law. The Principles of Business Conduct include a Finance Code of Ethics applicable to the Company’s Chief Executive Officer, Chief Financial Officer, controller and senior financial management. Any changes to these documents and any waivers granted by the Company with respect to its Finance Code of Ethics will be posted on the Company’s website.

BOARD OF DIRECTORS

Director Independence

It is the Company’s policy that a substantial majority of the members of its Board of Directors and all of the members of the Company’s Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee and Finance Committee qualify as independent under the independence standards set forth in the NYSE corporate governance listing standards and in the Company’s By-Laws. In addition, no director will be considered independent if he or she has a material relationship with the Company.

Pursuant to the Company’s Corporate Governance Guidelines, the Board undertook its annual review of director independence in February 2005. During this review, the Board considered any transactions and relationships between each director and any member of his or her immediate family and the Company or members of the Company’s senior management, and all other relevant facts and circumstances, including each director’s commercial, banking, consulting, legal, accounting, charitable and family relationships. Based on this review, the Board has determined that each of the following directors (which together constitute all of the members of the Board other than Mr. Swienton, the Company’s Chief Executive Officer) is independent: John M. Berra, Joseph L. Dionne, David I. Fuente, Lynn M. Martin, Daniel H. Mudd, Eugene A. Renna, Abbie J. Smith, Hansel E. Tookes II and Christine A. Varney.

Communications with the Board

Shareholders and other interested parties can communicate with the Company’s independent directors as a group on the Corporate Governance page of the Company’s website at www.ryder.com, or by mailing their communication to Independent Directors, c/o Corporate Secretary, Ryder System, Inc., 11690 N.W. 105th Street, Miami, Florida 33178. Any communications received from interested parties in the manner described above will be collected and organized by the Company’s Corporate Secretary and will be periodically, but in any event prior to each regularly-scheduled Board meeting, reported and/or delivered to the Company’s independent directors. The Corporate Secretary will not forward spam, junk mail, mass mailings, service complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate materials to the Board. Correspondence relating to certain of these matters such as service issues may be distributed internally within the Company for review and possible response. The procedures for communicating with the Company’s independent directors as a group are available on the Corporate Governance page of the Company’s website at www.ryder.com.

The Company’s Audit Committee has established procedures for the receipt, retention and treatment of complaints regarding questionable accounting, internal control, financial improprieties or auditing matters. Any of the Company’s employees or members of the general public may confidentially communicate concerns about any of these matters to any supervisor or manager, the Group Director of Internal Audit, the Vice President, Deputy General Counsel-Global Compliance, Labor and Employment, or on an anonymous basis by way of a toll-free hotline number, ethics@ryder.com, or audit@ryder.com. All of the reporting mechanisms are publicized on the Company’s website, in its Principles of Business Conduct and through wallet cards, brochures and location posters. Upon receipt of a complaint or concern, a determination will be made whether it pertains to accounting, internal control or auditing matters and if it does, it will be handled in accordance with the procedures established by the Audit Committee.

Board Meetings

The Board of Directors held six meetings in 2004. Each of the directors attended 75% or more of the aggregate number of meetings of the Board and Committees on which the director served in 2004. The Company’s independent directors meet in executive session without management present as part of each regularly-scheduled Board meeting. The Chair of the Company’s Corporate Governance and Nominating Committee presides over these executive Board sessions.

The Company expects each of its directors to attend the Company’s annual meeting of shareholders. Because the Board of Directors holds one of its regular meetings in conjunction with the Company’s annual meeting of shareholders, unless one or more members of the Board are unable to attend, all of the members of the Board are present for the annual meeting. All of the directors attended the 2004 Annual Meeting of Shareholders.

BOARD COMMITTEES

The Board has four standing committees — Audit, Compensation, Finance and Corporate Governance and Nominating. All of the Committees are composed entirely of independent directors. The Company has adopted written charters for each of the Committees that comply with the NYSE’s corporate governance listing standards and applicable provisions of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and SEC rules. The Committee charters set forth each committee’s responsibilities, and provide for a periodic review of the charter and an annual evaluation of the committee’s performance. The charters grant each committee the authority to obtain the advice and assistance of, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as the committee deems necessary to fulfill its obligations. The Committee charters are available on the Corporate Governance page of the Company’s website at www.ryder.com. Following is information regarding the committee’s membership, responsibilities and meetings.

NOMINATION OF DIRECTORS

The Corporate Governance and Nominating Committee is responsible for identifying qualified individuals to serve as directors, reviewing the qualifications of director candidates, including those recommended by the Company’s shareholders pursuant to its By-Laws, and recommending to the Board the nominees to be proposed by the Board for election as directors at the Company’s annual meeting of shareholders.

In identifying individuals to nominate for election to the Company’s Board, the Committee seeks candidates that:

The Committee will seek to identify individuals that would qualify as independent under the applicable NYSE listing standards and that are independent of any particular constituency. The Committee may, based on the composition of the Board, seek individuals that have specialized skills or expertise, experience as a leader of another public company or major complex organization, or relevant industry experience. In addition, the Committee will attempt to select candidates that will assist in making the Board a diverse body in terms of age, gender, ethnic background and professional experience.

Generally, the Committee identifies individuals for service on the Company’s Board through experienced director search firms that are paid to use their extensive resources and networks to find qualified individuals that meet the minimum qualifications established by the Board. These search firms create a comprehensive record of a candidate’s background, business and professional experience and other information that would be relevant to the Committee in determining a candidate’s capabilities and suitability. The Committee will also consider qualified candidates that are proposed by other members of the Board, the Company’s senior management and, to the extent submitted in accordance with the procedures described below, the Company’s shareholders. The Committee will not consider a director candidate unless it has received a document evidencing the candidate’s willingness to serve on the Board if elected and sufficient information relating to the candidate to determine whether he or she meets the minimum qualifications established by the Board.

If a shareholder would like to recommend a director candidate to the Committee, they must deliver to the Committee the same information and statement of willingness to serve described above. In addition, the recommending shareholder must deliver to the Committee a representation that the shareholder owns shares in the Company and intends to continue holding those shares until the relevant annual meeting of shareholders as well as a representation regarding the shareholder’s direct and indirect relationship to the suggested candidate. This information should be delivered to the Company at 11690 N.W. 105th Street, Miami, Florida 33178, Attention: Corporate Secretary, for delivery to the Committee on or before the date on which shareholder proposals are required to be delivered to the Company in order to be included in the proxy statement for the next annual meeting of the Company’s shareholders. Any candidates properly recommended by a shareholder will be considered and evaluated in the same way as any other candidate submitted to the Committee.

Upon receipt of this information, the Committee will evaluate and discuss the candidate’s qualifications, skills and characteristics in light of the current composition of the Board. The Committee may request additional information from the recommending party or the candidate in order to complete its initial evaluation. If the Committee determines that the individual would be a suitable candidate to serve as a director of the Company, the candidate will be asked to meet with members of the Committee, members of the Board and/or members of senior management, including in each case, the Company’s CEO, to discuss the candidate’s qualifications and ability to serve on the Board. Based on the Committee’s discussions and the results of these meetings, the Committee will recommend a nominee or nominees for election to the Board either by the Company’s shareholders at its annual meeting of shareholders or by the Board to fill vacancies on the Board between annual meetings. The Board will, after consideration of the Committee’s recommendations, nominate a slate of directors for election by the Company’s shareholders, or with regards to filling vacancies, elect a nominee to the Board.

DIRECTOR COMPENSATION

2004 Compensation

The compensation of directors during 2004 was as follows:

2005 Compensation

The Board of Directors revised its compensation structure effective January 1, 2005 to recognize the increased time commitment of the directors. The new compensation arrangements were recommended by an independent consultant to the Compensation Committee based upon relevant benchmarks and was approved by the Board. The new compensation structure is as follows:

Description of Benefits

Eligibility: Directors who are employees of the Company receive no compensation or benefits for service as a director.

Options: Issued at the fair market value on date of grant (generally on the date of the Annual Meeting of Shareholders). The options vest over a three-year period and expire ten years from the grant date. Upon the occurrence of a change in control, as defined, all outstanding options become exercisable.

Restricted Stock Units: Generally issued on the date of the annual meeting of shareholders. The restricted stock units vest and are paid (either as a lump sum or in annual installments) upon termination of a director’s service on the Board. The initial grant of restricted stock units will not vest unless the director has served a minimum of three years. Effective January 1, 2005, the vesting period for initial grants of restricted stock units was reduced to one

year. The units receive dividends which are reinvested through the Company’s Dividend Reinvestment Program, but do not have voting rights. Upon the occurrence of a change in control, as defined, all outstanding restricted stock units will vest and be paid to the director in a lump sum.

Deferred Compensation: Directors may elect to defer receipt of their cash retainer and meeting and other fees, which deferred amounts are part of the general assets of the Company and are credited with earnings based on several investment options selected by the director. The compensation may be deferred until the later to occur of a fixed date, retirement, disability or removal, and is payable in a lump sum or in installments. Upon a change of control of the Company, however, all deferred amounts will be paid immediately in a lump sum.

Directors’ Charitable Award Program: Under this program, each director may designate up to two charitable organizations to which the Company will contribute an aggregate of $500,000, in ten annual installments in the director’s name following the director’s death. The program may be funded with the proceeds of insurance policies and the directors obtain no financial benefits from the program. All of the Company’s directors currently participate in the program. The Board elected to terminate this program effective January 1, 2005. As a result, no director elected after that date will be entitled to participate in the program.

Company Matching Gifts to Education: Directors may participate in the Company’s matching program available to all employees, where the Company matches director contributions to eligible educational institutions up to an annual maximum of $10,000 per director.

Insurance: During 2004, the Company provided directors who joined the Board prior to May 3, 2002 with $100,000 accidental death and dismemberment coverage under its travel accident policy, $100,000 of group term life insurance and coverage under the Company’s medical plan. Effective January 1, 2005, the Company ceased providing accidental death and dismemberment and life insurance coverage to its directors. Effective June 30, 2005, the Company will cease providing medical plan coverage to its directors.

Stock Ownership Requirements: To further align the interests of the Company’s directors and shareholders, the Company imposes stock ownership requirements on its directors. Directors are expected to own Ryder stock or stock equivalents having a minimum value equal to one times such director’s total annual compensation. The ownership guidelines must be proportionately satisfied within five years of the director’s election to the Board.

CERTAIN RELATIONSHIPS

In the ordinary course of business, the Company engages in transactions with organizations with which certain of our directors are affiliated. All such transactions are conducted on an arm’s length basis and are not material to either the Company or the other organization.

RATIFICATION OF INDEPENDENT AUDITORS

(Proposal 2)

Upon the recommendation of the Audit Committee, the Board of Directors has appointed KPMG LLP as the Company’s independent auditors for the 2005 fiscal year. The Audit Committee is responsible for selecting the Company’s independent auditors. Although shareholder ratification of the appointment of KPMG LLP is not required, the Board of Directors believes that submitting the appointment to the shareholders for ratification is a matter of good corporate governance. The Audit Committee will consider the outcome of this vote in future deliberations regarding the appointment of the Company’s independent auditors. Even if the selection of KPMG LLP is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the year if it determines that such change would be in the best interests of the Company and its shareholders. Representatives of KPMG LLP will be present at the 2005 Annual Meeting to respond to questions and to make a statement if they desire to do so.

Fees and Services of KPMG LLP

The following fees were paid to KPMG LLP for services rendered in fiscal years 2004 and 2003 ($ in millions):

Audit Fees primarily represent amounts paid for the audit of the Company’s consolidated financial statements, a limited review of financial statements included in the Company’s Form 10-Q (or other periodic reports or documents filed with the SEC), statutory or financial audits for subsidiaries or affiliates of the Company, and consultations relating to financial accounting or reporting standards. In 2004, audit fees also included fees for the audit pursuant to Section 404 of Sarbanes-Oxley.

Audit-Related Fees represent amounts paid for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. These services include audits of employee benefit plans and consultations concerning matters relating to Section 404 of Sarbanes-Oxley.

Tax Fees represent amounts paid for U.S. and international tax compliance services (including review of the Company’s federal, state, local and international tax returns), tax advice and tax planning. Of the tax fees paid in 2004 and 2003, $0.3 and $0.1, respectively, relate to tax compliance services.

All Other Fees represent amounts paid for all other services rendered to the Company that do not constitute Audit Fees, Audit-Related Fees or Tax Fees. These services principally relate to risk advisory services.

Approval Policy

All services rendered by KPMG LLP are pre-approved by the Audit Committee in accordance with the Company’s Approval Policy for Independent Auditor Services and are monitored both as to spending level and work content by the Audit Committee to maintain the appropriate objectivity and independence of KPMG LLP’s core service, which is the audit of the Company’s consolidated financial statements. Under the policy, the terms and fees of annual audit services, and any changes thereto, must be approved by the Audit Committee. The policy also sets forth detailed pre-approved categories of other audit, audit-related, tax and other non-audit services that may be performed by the Company’s independent auditors during the fiscal year, subject to the dollar limitations set by the Committee. The Audit Committee may, in accordance with the policy, delegate to any member of the Audit Committee the authority to approve audit and non-audit services to be performed by the independent auditors. Any Audit Committee member who exercises this delegated authority must report any approval decisions to the Audit Committee at its next scheduled meeting. The foregoing pre-approval requirements are subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 which are approved by the Audit Committee prior to completion of the audit. All of the services described above were approved by the Audit Committee in accordance with its Approval Policy.

The Board of Directors recommends a vote FOR ratification of the appointment of KPMG LLP as independent auditors.

AUDIT COMMITTEE REPORT

The following report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that Ryder System, Inc. specifically incorporates it by reference into a filing.

The Audit Committee is comprised of five outside directors, all of whom are independent under the rules of the New York Stock Exchange and applicable rules of the Securities and Exchange Commission. The Committee operates under a written charter which specifies the Committee’s responsibilities. The full text of the Committee’s charter is available on the Corporate Governance page of the Company’s website (www.ryder.com). The members are not professional accountants or auditors and their functions are not intended to duplicate or to certify the activities of management and the independent auditor.

The Audit Committee serves in a board-level oversight role in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee members in business, financial and accounting matters. Management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent auditors, KPMG LLP, are responsible for performing an independent audit of the consolidated financial statements and expressing an opinion to the Audit Committee on the conformity of those statements with accounting principles generally accepted in the United States of America.

The Audit Committee discusses with the internal auditors and the independent auditors the overall scope and plans for their respective audits. The Committee meets periodically with the internal auditors and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of internal controls and the overall quality of financial reporting. The Audit Committee held thirteen meetings during the calendar year 2004.

As part of its oversight of the Company’s financial statements, the Committee reviews and discusses with both management and the Company’s independent auditors all annual and quarterly financial statements prior to their issuance. During fiscal year 2004, management advised the Committee that each set of financial statements reviewed had been prepared in accordance with generally accepted accounting principles, and reviewed significant accounting and disclosure issues with the Committee. The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2004 with management and with the Company’s independent auditors. The Committee has also discussed with KPMG LLP those matters required to be discussed by Statement on Auditing Standards No. 6, “Communications with Audit Committees.” The Audit Committee has received the written disclosures from and discussed with the independent auditors those items required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” The Audit Committee discussed with KPMG LLP their independence, including the non-audit services listed in their written disclosures and presented in this proxy.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the Company for the fiscal year ended December 31, 2004 be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 for filing with the Securities and Exchange Commission.

Submitted by the Audit Committee of the Board of Directors.

Eugene A. Renna (Chairman)

Joseph L. Dionne

Daniel H. Mudd

Abbie J. Smith

Hansel E. Tookes II

SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS

The following table shows the number of shares of common stock beneficially owned as of January 15, 2005, by each director and executive officer named in the Summary Compensation Table herein, individually, and all directors and executive officers as a group:

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers to file reports with the SEC and the NYSE relating to their common stock ownership and changes in such ownership. To the Company’s knowledge, based solely on its records and certain written representations, during the year ended December 31, 2004, all Section 16(a) filing requirements applicable to directors and executive officers were complied with on a timely basis.

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table shows the number of shares of common stock held by all persons who are known by the Company to beneficially own or exercise voting or dispositive control of more than five percent of the Company’s outstanding common stock.

APPROVAL OF RYDER SYSTEM, INC. 2005 EQUITY COMPENSATION PLAN

(Proposal 3)

Background

The Board of Directors and its Compensation Committee believe that attracting and retaining Board members, executives and other key employees of high quality has been and will continue to be essential to the Company’s growth and success. Consistent with this view, at the Annual Meeting, shareholders will be asked to approve the Ryder System, Inc. 2005 Equity Compensation Plan (which we refer to as the 2005 Plan), which was approved by the Board of Directors on February 10, 2005. The 2005 Plan, like our current Ryder System, Inc. 1995 Stock Incentive Plan (which we refer to as the 1995 Plan) and our Ryder System, Inc. Board of Directors Stock Award Plan (which we refer to as the Directors Plan), will enable the Company to formulate and implement a compensation program that will attract, motivate and retain experienced, highly-qualified directors and employees who will contribute to the Company’s financial success, and will align the interests of the Company’s directors and employees with those of its shareholders.

The 2005 Plan would allow the Compensation Committee to grant a variety of stock-based awards to the Company’s directors, executive officers and other key employees. The 2005 Plan will serve as the umbrella plan for all of our stock-based and cash-based incentive compensation programs for our directors, senior executives and other key employees and would replace the 1995 Plan and the Ryder System, Inc. Stock for Merit Increase Replacement Plan (which we refer to as the Stock for Merit Plan) which will expire on May 4, 2005, as well as the Directors Plan. If shareholders approve the 2005 Plan, the Company will not grant any further awards under the 1995 Plan, the Stock for Merit Plan or the Directors Plan (which we refer to collectively as the Current Plans). Awards already outstanding under the Current Plans will continue to remain outstanding in accordance with their terms.

The Board of Directors seeks shareholder approval of the 2005 Plan in order to satisfy certain legal requirements, including requirements of the New York Stock Exchange (NYSE). In addition, the Board regards shareholder approval of the 2005 Plan as desirable and consistent with good corporate governance practices.

The Board of Directors and Compensation Committee also seek to preserve the Company’s ability to claim tax deductions for compensation paid, to the greatest extent practicable. Section 162(m) of the Internal Revenue Code limits the deductions a publicly held company can claim for compensation in excess of $1 million in a given year paid to the Chief Executive Officer and the four other most highly compensated executive officers serving on the last day of the fiscal year (generally referred to as the “covered employees”). “Performance-based” compensation that meets certain requirements is not counted against the $1 million deductibility cap, and therefore remains fully deductible. The Company is seeking shareholder approval of the 2005 Plan in order to meet a key requirement for certain awards to qualify as “performance-based” under Section 162(m).

In addition, shareholder approval will permit designated stock options to qualify as incentive stock options under the Internal Revenue Code. Such qualification can give the holder of the options more favorable tax treatment, as explained below.

The approval of the 2005 Plan will not affect the Company’s ability to make stock- or cash-based awards outside of the 2005 Plan to the extent consistent with applicable law and stock exchange rules. It also does not govern the Company’s stock accumulation programs made available through the Company’s Stock Purchase Plan for Employees, 401(k) Savings Plan, and Directors Stock Plan (pursuant to which non-employee directors can elect to receive Company stock at fair market value in lieu of all or a portion of their annual cash retainer).

Potential Dilution

The aggregate number of shares that may be issued to employees and directors under the 2005 Plan will not exceed 5,000,000 (which consists of 1,900,000 shares available for grant under the Current Plans and 3,100,000 additional shares). Of this amount, no more than 1,000,000 shares may be issued pursuant to grants of “full-value” awards (as described below). Shares subject to awards granted under the 2005 Plan or under the Current Plans which are subsequently forfeited, expire unexercised or are otherwise not issued will not be treated as having been issued for purposes of the share limitation.

Restrictions on Repricing

The 2005 Plan includes a restriction that, unless authorized by shareholders, the Company will not amend or replace options previously granted under the 2005 Plan in a transaction that constitutes a “repricing” as that term is defined under NYSE rules. Adjustments to the exercise price or number of shares subject to an option to reflect the effects of a stock split or other extraordinary corporate transaction will not constitute a “repricing.”

Description of the 2005 Plan

The following is a brief description of the material features of the 2005 Plan. This description is qualified in its entirety by reference to the full text of the 2005 Plan, a copy of which is attached to this Proxy Statement as Appendix A.

Administration. The Compensation Committee will have the authority to select award recipients, determine the type, size and other terms and condition of the award, and make all other decisions and determinations as may be required under the terms of the 2005 Plan or as the Compensation Committee may deem necessary or advisable for the administration of the 2005 Plan. The Compensation Committee is composed of persons who are both non-employee directors, as defined under Section 16b-3 of the Securities Exchange Act of 1934, as amended, and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. The Compensation Committee will be permitted to delegate to one or more senior executives of the Company the authority to make grants of awards to officers (other than executive officers) and employees of the Company and such other administrative responsibilities as the Compensation Committee may deem necessary or advisable, to the extent such delegation is consistent with applicable law.

Eligibility. Officers, employees and non-employee directors of the Company and its subsidiaries are eligible to be selected as award recipients.

Type of Awards. The Company’s current equity compensation awards to employees are generally comprised of stock options and restricted stock. The 2005 Plan gives the Committee the flexibility to grant a variety of other equity instruments in addition to stock options and restricted stock including bonus shares, stock appreciation rights, share units, performance units and dividend equivalents. Awards may be granted alone or in combination with any other award granted under the 2005 Plan or any other plan. The Committee will determine the size of each award to be granted (including, where applicable, the number of shares to which an award will relate), and all other terms and conditions of each award, provided that (i) no award will expire more than seven years from the date of grant, (ii) no full-value award (other than a full-value award that is performance-based) will fully vest within three years of the date of grant and (iii) no full-value award that is performance-based will fully vest within one year of the date of grant. Below is a description of the types of awards that may be issued under the 2005 Plan:

Limitations on Stock-Based Awards. The aggregate number of shares that may be issued to employees and directors under the 2005 Plan will not exceed 5,000,000 (which consists of 1,900,000 shares available for grant under the Current Plans and 3,100,000 additional shares); provided that no more than 1,000,000 shares may be issued pursuant to awards (which we refer to as full-value awards) that do not require the employee or director to pay (in cash, foregone cash compensation, or consideration other than the performance of services) the full fair market value (determined on the grant date) for the shares (e.g., stock options with an exercise price equal to fair market value) or that are not otherwise based solely on the appreciation of the shares from the fair market value of the shares as determined on the date the award is granted (e.g., stock appreciation rights). In addition, in any calendar year, no employee or director may be granted stock-based awards that relate to more than 500,000 shares, or cash-based awards that can be settled for more than $5,000,000. Shares issued under the 2005 Plan or any Current Plan that are reacquired by the Company in connection with a cancellation, forfeiture, termination or other failure to satisfy performance conditions will not be treated as having been issued for purposes of the share limitation provided that upon the exercise of any stock appreciation right, the full number of shares underlying such stock appreciation right on the date of grant will be counted against the aggregate share limitation irrespective of the manner in which such stock appreciation right is settled. Shares delivered under the Plan may be newly issued shares, treasury shares, or shares acquired in the open market.

Adjustments. In the event of a large, special or non-recurring dividend or distribution, recapitalization, stock split, stock dividend, reorganization, business combination, or other similar corporate transaction or event affecting the Company’s common stock, the Compensation Committee may adjust the number and kind of shares subject to the aggregate and individual share limitations described above. The Compensation Committee may also adjust outstanding awards upon occurrence of these events in order to preserve the award without enhancing the value of the award. These adjustments may include changes to the number of shares subject to an award, the exercise price or share price referenced in the award terms, and other terms of the award. The Compensation Committee is also authorized to adjust performance conditions and other terms of awards in response to these kinds of events or to changes in applicable laws, regulations, or accounting principles.

Amendment, Termination. The Board may amend, suspend, discontinue, or terminate the 2005 Plan or the Compensation Committee’s authority to grant awards under the 2005 Plan without shareholder approval, provided that shareholder approval will be required for any amendment that will (i) materially modify the terms of the 2005

Plan or (ii) require shareholder approval as a matter of law or regulation or under the NYSE rules. Unless earlier terminated, the 2005 Plan will terminate ten years after its approval by shareholders.

Tax Consequences

The federal income tax consequences arising with respect to awards granted under the 2005 Plan will depend on the type of award. From the recipients’ standpoint, as a general rule, ordinary income will be recognized at the time of payment of cash or delivery of actual shares. Future appreciation on shares held beyond the ordinary income recognition event will be taxable at capital gains rates when the shares are sold. The Company, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the recipient, and the Company will not be entitled to any tax deduction in respect of capital gain income recognized by the recipient. Exceptions to these general rules may arise under the following circumstances: (i) if shares, when delivered, are subject to a substantial risk of forfeiture by reason of failure to satisfy any employment or performance-related condition, ordinary income taxation and the Company’s tax deduction will be delayed until the risk of forfeiture lapses (unless the recipient makes a special election to ignore the risk of forfeiture); (ii) if an employee is granted an option that qualifies as “incentive stock option,” no ordinary income will be recognized, and the Company will not be entitled to any tax deduction, if shares acquired upon exercise of such option are held more than the longer of one year from the date of exercise and two years from the date of grant; (iii) the Company will not be entitled to a tax deduction for compensation attributable to awards granted to one of its covered employees, if and to the extent such compensation does not qualify as “performance-based” compensation Section 162(m) of their Internal Revenue Code, and such compensation, along with any other non-performance-based compensation paid in the same calendar year, exceeds $1 million; and (iv) an award may be taxable at 20 percentage points above ordinary income tax rates at the time it becomes vested, even if that is prior to the delivery of the cash or Stock in settlement of the award, if the award constitutes “deferred compensation” under Code Section 409A, and the requirements of Code Section 409A are not satisfied.

The foregoing provides only a general description of the application of federal income tax laws to certain awards under the 2005 Plan. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the 2005 Plan, as the tax consequences may vary with the types of awards made, the identity of the recipients and the method of payment or settlement. This summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local, or foreign tax laws.

New Plan Benefits

Future benefits under the 2005 Plan generally will be granted at the discretion of the Compensation Committee and are therefore not currently determinable. During 2004, stock options and shares of restricted stock were granted under the 1995 Plan to the named executive officers as set forth herein in the tables captioned Summary Compensation Table and Option Grants in 2004. The amount and/or value of stock options and restricted stock granted in 2004 under the Board of Directors Stock Award Plan (and to be granted in 2005 under the 2005 Plan, if approved) to the Company’s non-employee directors is set forth herein under Director Compensation. In addition, during 2004, 924,300 stock options and 55,150 shares of restricted stock were granted to all of the Company’s employees (other than named executive officers) under the 1995 Plan.

Vote Required

The affirmative vote of the holders of a majority of the total number of shares outstanding and entitled to vote is required for the approval of the 2005 Plan.

The Board of Directors recommends a vote FOR approval of the Ryder System, Inc. 2005 Equity Compensation Plan.

AMENDMENT TO RYDER SYSTEM, INC. STOCK PURCHASE PLAN FOR EMPLOYEES

(Proposal 4)

Background

The Board of Directors and its Compensation Committee believe that providing employees with an opportunity to acquire an ownership interest in the Company through the purchase of the Company’s common stock at a discount to fair market value is beneficial to the Company and its shareholders. Consistent with this view, at the Annual Meeting, shareholders will be asked to approve an amendment to the Ryder System, Inc. Stock Purchase Plan for Employees (which we refer to as the Purchase Plan) that will increase the maximum number of shares of Ryder common stock authorized for issuance under the Purchase Plan by 1,000,000 shares. The Board of Directors approved the amendment on February 10, 2005, subject to shareholder approval. If the amendment is approved by shareholders, the aggregate number of shares available for future issuance under the Purchase Plan would be 1,315,485.

The Company is seeking shareholder approval of the amendment to the Purchase Plan so that it will continue to qualify under Section 423 of the Internal Revenue Code. It is not a tax-qualified, deferred compensation plan under Section 401(a) of the Internal Revenue Code, nor is it subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Description of the Purchase Plan

The following is a brief description of the material features of the Purchase Plan. This description is qualified in its entirety by reference to the full text of the Purchase Plan, a copy of which is attached to this Proxy Statement as Appendix B.

Administration. The Purchase Plan is administered by the Compensation Committee of the Board of Directors consisting of at least two disinterested directors which, subject to the express provisions of the Purchase Plan, has full power to (i) interpret the Purchase Plan, (ii) make rules and regulations relating to the administration of the Purchase Plan, and (iii) make all other determinations relating to the Purchase Plan.

Eligibility and Participation. All regular full-time and certain part-time employees of the Company or its participating subsidiaries are eligible to participate in the Purchase Plan except: (i) any employee who owns 5% or more of the Company’s common stock; (ii) any employee who is ordinarily employed by the Company for less than 20 hours per week; or (iii) any executive officer of the Company. A participant’s participation in the Purchase Plan continues to be effective for each consecutive offering period until the participant withdraws from the Purchase Plan or ceases to be eligible to participate in the Purchase Plan.

As of December 31, 2004, approximately 2,456 employees were participating in the Purchase Plan. Non-employee directors are not eligible to participate. The actual benefits, if any, to participants in the Purchase Plan are not determinable prior to the purchase of shares thereunder as the value, if any, of such shares to their holders is represented by the difference between the market price of a share of the Company’s common stock on the date of the purchase and the purchase price of the shares, as described below.

Offering Periods; Purchase Price; Holding Period. The Purchase Plan provides for quarterly offerings of shares of common stock to eligible employees. Employees may subscribe and pay for shares through payroll deductions based upon either (i) a percentage of the employee’s base pay (up to 15%) or (ii) a specific dollar amount. In any calendar year, a participating employee is not permitted to purchase shares with an aggregate fair market value (as of each offering date) in excess of $25,000.

The purchase price of the shares of common stock offered under the Purchase Plan will be equal to 85% of the lesser of the fair market value of the common stock as of the first day of the offering period (the offering date) or the fair market value on the last day of the offering period (the purchase date). For example, if an employee who enrolls in the offering period beginning on April 1, 2005 continues in the Purchase Plan through the end of that quarterly period, he or she will make a final purchase of stock on June 30, 2005 at 85% of the lesser of the fair market value of the stock on April 1, 2005 or the fair market value on June 30, 2005. The purchases are made for participants on the

last day of each calendar quarter by applying payroll deductions accumulated over the preceding three months towards such purchases.

Participating employees may withdraw from the Purchase Plan during an offering period, and receive back their accumulated payroll deductions, without interest, at any time during the first two months of the offering period. If any employee does not withdraw prior to that date, he or she will continue to participate in Purchase Plan for the current offering period. A participating employee may withdraw from the Purchase Plan effective as of the next offering period at any time prior to the beginning of such offering period.

In order to encourage continued investment in Ryder stock, the Purchase Plan provides that participating employees may not sell shares acquired through the Purchase Plan until one year (for Company officers) or three months (for all other employees) after the shares were purchased by the employee.

Termination of Employment or Loss of Eligibility. Termination of a participant’s employment for any reason, including retirement or death, or the failure of the participant to remain in the continuous employ of the Company for at least 20 hours per week during an offering period (unless on an approved leave of absence or a temporary reduction of hours), causes the employee to become ineligible to participate in the Purchase Plan. In such event, payroll deductions credited to the participant’s account will be returned to him or her or, in the case of death, to the person or persons entitled thereto as provided in the Purchase Plan, without interest.

Capital Changes. In the event any change is made in the Company’s capitalization during an offering period, such as a stock split or stock dividend, that results in an increase or decrease in the number of shares of Common Stock outstanding without receipt of consideration by the Company, appropriate adjustment will be made to the purchase price and to the number of shares subject to stock purchase under the Purchase Plan and to the number of shares authorized for issuance under the Purchase Plan.

Amendment and Termination. The Compensation Committee may terminate or amend the Purchase Plan at any time, except that no amendment will be effective unless it is approved by the shareholders of the Company if such approval is required under Section 423 of the Internal Revenue Code, or any other applicable law, regulation or stock exchange rule. The termination or modification of the Purchase Plan may not affect rights to purchase stock previously granted.

Tax Consequences

The Purchase Plan, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Section 421 and 423 of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the Purchase Plan are sold or otherwise disposed of. If a participant disposes of his or her shares of common stock within the later of two years from the offering date that applies to the shares or within one year from the purchase date of the shares, a transaction referred to as a “disqualifying disposition” occurs and the participant will realize ordinary income in the year of such disposition equal to the amount by which the fair market value of the stock on the purchase date exceeded the purchase price. In such instances, the amount of such ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares after such basis adjustment will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares of common stock for more than one year after the purchase date.

If the participant disposes of his or her shares of common stock more than two years after the relevant offering date of such shares and more than one year after the purchase date of such shares, the participant will realize ordinary income in the year of such disposition equal to the lesser of (i) the excess of the fair market value of the shares on the date of disposition over the purchase price or (ii) 15% of the fair market value of the shares on the relevant offering date for such shares. The amount of such ordinary income will be added to the participant’s basis in the shares, and any additional gain recognized on the disposition of the shares after such basis adjustment will be long-term capital gain. If the fair market value of the shares on the date of disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a capital loss.

The Company will generally be entitled to a deduction in the year of a disqualifying disposition equal to the amount of ordinary income recognized by the participant as a result of such disposition. In all other cases, no deduction is allowed the Company.

The foregoing provides only a general description of the application of federal income tax laws upon the participants and the Company with respect to participation in the Purchase Plan. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the Purchase Plan. This summary does not address the effects of other federal taxes or taxes imposed under state, local or foreign tax laws.

Vote Required

The affirmative vote of the holders of a majority of the total number of shares outstanding and entitled to vote is required for the approval of the amendment to the Purchase Plan.

The Board Recommends a vote FOR the amendment to the Ryder System, Inc. Stock Purchase Plan for Employees.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table includes information as of December 31, 2004 about certain plans which provide for the issuance of common stock in connection with the exercise of stock options and other stock-based awards. The table does not include the additional shares of common stock that may be issued under the 2005 Plan or the Purchase Plan, as amended, if the 2005 Plan and the amendment to the Purchase Plan are approved by shareholders at the Annual Meeting.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that Ryder System, Inc. specifically incorporates it by reference into a filing.

The Compensation Committee of the Company’s Board of Directors consists of four independent directors. None of the directors on the Compensation Committee is an officer or employee of the Company or any of its subsidiaries. No executive officer of the Company serves on the compensation committee or board of directors of another company that has an executive officer on the Company’s Compensation Committee or Board of Directors. The Compensation Committee administers all of the Company’s executive compensation policies and programs (including perquisites and other benefits) and regularly reports to the Board of Directors on these matters.

Compensation Philosophy

The Company’s goal in formulating and implementing executive compensation policies and programs that are applicable to all senior management including the Company’s Chief Executive Officer (CEO) and other executive officers named herein in the Summary Compensation Table (“named officers”) on page 30, is to:

The Committee regularly evaluates the effectiveness of the Company’s executive compensation programs in light of the Company’s compensation philosophy. In order to ensure that the compensation programs are competitive, the Committee evaluates each element of the executive compensation program based upon the compensation practices and financial performance of a comparative group of similar companies. Management and independent consultants analyze compensation survey data on behalf of the Company to provide comparisons to the Compensation Committee. The Committee utilizes the compensation survey analysis and considers each element of the total executive compensation and benefits package in evaluating the executive compensation program and making individual compensation decisions.

The Committee reviewed but did not change any of the Company’s executive compensation policies or programs during 2004.

Components of Executive Compensation

In 2004, the Company’s executive compensation program consisted of three components: (1) base salary; (2) annual incentive bonus payments based on the Company’s financial performance; and (3) long-term incentive awards comprised of stock options, restricted stock which vest over a period of years, and performance-based cash awards. Executive officers also receive employee benefits generally available to all employees of the Company. The Committee annually reviews and determines total compensation for members of senior management based in part on recommendations made by the CEO. The Compensation Committee annually reviews, and together with the Company’s independent directors, approves all compensation actions relating to the CEO. The Compensation Committee believes that the total compensation package for the CEO and senior management represents an attractive compensation and benefits program that is both competitive with comparable companies and consistent with the Company’s compensation philosophy.

Base Salary

When reviewing individual executive salary levels, the Committee considers four factors: (1) Company performance; (2) the executive officer’s individual performance; (3) the executive officer’s responsibilities and potential; and (4) comparative data provided by the Company’s outside compensation consultants. The Committee does not utilize a formula in making salary adjustments. The Compensation Committee believes that executive officer base

salaries are appropriate considering the responsibilities and importance of those positions to the operations of the Company.

In 2004, the Committee approved a 2% merit-based salary increase for all executive officers which was consistent with the merit increase given to all of the Company’s exempt employees. One named officer received an equity-based salary increase in 2004.

Incentive Bonus Payments

The annual incentive bonus plan provides for payments to executives of a specified cash amount (not to exceed 200% of the target amount) based upon the percentage achievement of specific financial objectives. Company-wide and individual financial objectives and criteria are established at the start of each fiscal year. The target bonus amount (which is generally based on a percentage of the executive’s base salary) is also established at the start of each fiscal year. Incentive bonus payments for executives can be increased or decreased based on individual performance.

Under the 2004 incentive plan, bonus awards for executives were driven by economic value added, also known as EVA, and by other performance measures including revenue growth. EVA is a financial measure that indicates whether a business is earning more than its cost of capital. Award opportunities were set to provide above-median compensation in relation to comparable companies if Company performance exceeded financial performance targets and below-median compensation in relation to comparable companies if performance was below these targets. The specific targets are considered confidential by the Company and are not included in this Report in order to avoid compromising the Company’s competitive position.

For 2004, the Company achieved 162% of its target bonus amount. Bonus amounts paid to named officers were consistent with the provisions of the 2004 incentive plan and are set forth herein in the Summary Compensation Table on page 30.

The 2005 incentive plan approved by the Compensation Committee in February 2005 includes new performance measures — net operating revenue, return on capital and earnings per share.

Long-Term Incentive Awards

Long-term incentive awards for senior management consist of (1) a mix of stock options and restricted stock and (2) performance-based cash awards.

Equity Awards. Under the Company’s 1995 Stock Incentive Plan, the Committee may award annual stock awards comprised of options and/or restricted stock to executive officers and newly promoted or newly-hired executives. The Compensation Committee first determines the value of an award to be granted to an executive based on the executive’s responsibilities and position within the Company, current individual performance, potential for promotion and the officer’s impact on Company performance. Then, using valuation methodologies determined by the Compensation Committee in consultation with independent consultants, allocates the award between stock options and restricted stock. The value or amount of an executive’s existing stock awards does not influence the size of future stock awards given to that executive.

Stock options are issued at fair market value as of the date of grant, typically vest over three years and have a seven year term. Restricted stock typically vests over three years. In 2004, the Committee granted stock awards to the named officers as set forth herein in the table titled Option Grants in 2004 on page 31.

Performance-Based Cash Awards. In 2002, the Company introduced a long-term incentive plan which provides a performance-based cash component of long-term compensation for executive officers. The plan rewards executive officers with additional compensation contingent upon attaining critical business objectives during a three-year period. The Committee establishes a three-year cycle for eligible executives with performance measurements and goals for the executive for each year of the cycle. The Company funds the plan annually by depositing earned amounts into an account for the executive. The amounts earned under the plan vest upon the sixth and eighteenth month anniversaries of the end of each three-year cycle. Since the inception of the plan in 2002, EVA has served as the only performance measurement. The awards earned by the named officers for the 2002-2004 plan cycle are set forth herein in the Summary Compensation Table on page 30 under the “Deferred Bonus” column.

Chief Executive Officer Compensation

The independent directors annually evaluate CEO performance, the results of which are used to determine CEO compensation. In February 2004, the independent directors approved a $60,000 salary increase for Mr. Swienton, the Company’s CEO, bringing his total salary to $700,000. The directors also approved a grant of 150,000 stock options and 15,000 shares of restricted stock which vests equally over three years. In February 2005, the Committee approved bonus payments to Mr. Swienton equal to $1,110,580 under the 2004 incentive bonus plan and $1,694,410 under the long-term incentive plan, which amounts are equal to the amounts he was entitled to pursuant to the terms of those plans. The directors’ decisions regarding CEO compensation were based on Mr. Swienton’s leadership in advancing the Company’s operational and financial goals. In particular, the directors focused on the Company’s reported earnings per share growth for the year, the rise in the Company’s stock price, the Company’s balance sheet strength, the appointment and development of key officers and the successful completion and integration of two strategically-significant acquisitions.

Stock Ownership Requirements

To demonstrate the importance of linking executive management and shareholder interests, in 1993 the Company established formal stock ownership requirements for all executive officers of the Company. The CEO must own Company stock or stock equivalents having a value equal to at least two times his annual base salary, and executive officers must own Company stock or stock equivalents having a value equal to at least one times their base salary. All officers were in compliance with these stock ownership requirements during 2004.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the “Code”) precludes public companies from taking a deduction for compensation in excess of $1 million paid to the Company’s CEO and the other four most highly paid employees unless certain specific and detailed criteria are met, including the requirement that compensation be “performance-based” and under a plan approved by the Company’s shareholders.

The Committee has reviewed all components of the Company’s executive compensation program based upon the requirements of Section 162(m) of the Internal Revenue Code. Stock-based awards under the Company’s stock incentive plans, including the Ryder System, Inc. 2005 Equity Compensation Plan being submitted for shareholder approval at the Annual Meeting, meet the requirements of Section 162(m), and accordingly, stock-based awards granted to the Company’s executive officers under these plans are eligible for the “performance-based” exception to Section 162(m). While the annual incentive bonus plan and the long-term incentive plan are based on performance and may qualify for the incentive compensation exception under Section 162(m), these plans were not previously submitted to the shareholders for their approval and therefore payments under the plans do not qualify for the exceptions under Section 162(m). If the 2005 Plan is approved by shareholders at the Annual Meeting, performance-based cash awards made under the plan will be eligible for a Section 162(m) exception.

The Committee believes that preserving its flexibility in awarding compensation is in the best interest of the Company and its shareholders and may determine, in light of all applicable circumstances, to award compensation otherwise then in a manner that will preserve the deductibility of such compensation under Section 162(m).

Submitted by the Compensation Committee of the Board of Directors.

David I. Fuente (Chairman)

John M. Berra

Lynn M. Martin

Christine A. Varney

EXECUTIVE COMPENSATION

The following table sets forth for 2004, 2003 and 2002, the compensation for the Company’s chief executive officer and for each of the four most highly compensated executive officers of the Company, other than the chief executive officer, serving as executive officers at the end of 2004 (collectively, the “named executive officers”).

Summary Compensation Table

Severance and Change of Control Agreements

The Company has entered into a severance agreement with each of its officers including the named executive officers, which provides that if the Company terminates the employment of the executive for reasons other than death, disability or cause (as defined in the agreement), and certain other requirements are met, the Company will provide the executive with a severance payment and certain other benefits and perquisites. The severance payment is based on a multiple of the executive’s then-current base salary and tenure-related bonus. The severance payment to which each named executive officer is entitled under such officer’s severance agreement is as follows: Mr. Swienton — three times salary and three times bonus; Mr. Griffin — two times salary and two times bonus; Ms. Leinbach — three times salary and two times bonus; Ms. O’Meara — three times salary and two times bonus; and Mr. Tegnelia — two times salary and two times bonus.

The Company has also entered into a change of control severance agreement with each named executive officer and certain other officers which provides that if the Company terminates the employment of the executive for reasons other than death, disability or cause or if the executive terminates his or her employment for good reason (as defined in the agreement), in each case within three years of a change of control of the Company (as defined in the agreement), the Company will provide the executive with severance benefits including those under the above-described severance agreements and some additional severance benefits.

OPTION GRANTS IN 2004

The following table provides information regarding the grant of stock options to the named executive officers in 2004 and the potential value of such stock options assuming annual compound appreciation of the underlying share price at rates of 0%, 5% and 10% from the date the stock options were granted over the full option term of seven years. The 5% and 10% appreciation rates are required to be disclosed by SEC rules and are not intended to forecast possible future appreciation, if any, in the Company’s stock price.

The appreciation during this period realized by the five named executive officers from the stock options granted on February 12, 2004 and October 8, 2004 would be 0.39% and 0.02%, respectively, of the gain to all shareholders. The use of the 5% and 10% rates as required by the SEC is not intended by the Company to forecast possible future appreciation of the Company’s common stock.

AGGREGATED OPTION EXERCISES IN 2004 AND YEAR-END OPTION VALUES

The following table provides information, with respect to the named executive officers, regarding the exercise of options during 2004:

PENSION BENEFITS

The Company maintains the Ryder System, Inc. Retirement Plan (the “Retirement Plan”) for regular full-time employees other than those who are covered by plans administered by labor unions and certain other non-exempt employees. Benefits payable under the Retirement Plan are based on an employee’s career earnings with the Company and its subsidiaries. At customary retirement age of sixty-five (65), a participant is entitled to a monthly pension benefit payable for life. The annual pension benefit, when paid in the form of a life annuity with no survivor’s benefits, is generally equal to the sum of 1.45 percent of the first $15,600 of total compensation received during the calendar year, plus 1.85 percent of the portion of such total compensation received during the calendar year in excess of $15,600, during each such year while a Retirement Plan member. Accrued benefits under the Retirement Plan have been improved from time to time.

Retirement Plan benefits vest at the earlier of the completion of five (5) years of credited service or upon reaching age sixty-five (65), provided, however, that in the event of a change of control of the Company, all participants will be fully vested and the term “accrued benefit” will include the value of early retirement benefits for any participant age forty-five (45) or older or with ten (10) or more years of service. These benefits are not subject to any reduction for Social Security benefits or other offset amounts. An employee’s pension benefits may be paid in certain alternative forms having actuarially equivalent values.

The maximum annual benefit under a qualified pension plan is currently $165,000 beginning at the Social Security retirement age. The maximum compensation and bonus that may be taken into account in determining annual retirement accruals is currently $205,000. The Company also maintains a non-qualified, unfunded benefit plan, called the Benefit Restoration Plan (the “Restoration Plan”), which covers those participants of the Retirement Plan whose benefits are reduced by the Internal Revenue Code or other United States laws. A participant in the Restoration Plan is entitled to a benefit equaling the difference between the amount of benefits the participant is entitled to without reduction and the amount of benefits the participant is entitled to after the reductions.

The following table sets forth annual pension benefit projections for the named executive officers assuming they remain continuously employed by the Company at current compensation levels until retirement at the normal retirement date or age.

Estimated Annual Benefits at Retirement¹

(in the form of a single life annuity)

Until December 31, 2003, the Company maintained a Split Dollar Life Insurance Plan for the benefit of certain named executive officers. The Plan provided participants with additional life insurance. The Company paid all costs equal to the premiums on the life insurance acquired prior to retirement. The Company analyzed the impact of certain provisions of Sarbanes-Oxley on its Split Dollar Life Insurance Plan. Based on its evaluation, the Company terminated the Plan effective December 31, 2003. As a result, during 2004, the Company paid certain participants, including certain named executive officers, an amount equal to the cash surrender value of the relevant policy less the aggregate premiums paid by the Company for such policy. Amounts paid to the named executive officers are included in the Summary Compensation Table on page 30.

PERFORMANCE GRAPH

The following graph compares the performance of the Company’s common stock with the performance of the Standard & Poor’s 500 Composite Stock Index and the Dow Jones Transportation Index for a five year period by measuring the changes in common stock prices from December 31, 1999.

The performance graph assumes that $100 was invested on December 31, 1999 in each of the Company’s common stock, the Standard & Poor’s 500 Composite Stock Price Index and the Dow Jones Transportation Index, and that all dividends were reinvested. Past performance is not necessarily an indicator of future results.

APPENDIX A

RYDER SYSTEM, INC.

2005 EQUITY COMPENSATION PLAN

The purpose of this 2005 Equity Compensation Plan (the “Plan”) is to advance the interests of the Company and its shareholders by providing a means (a) to attract, retain, and reward directors, officers, other employees, and persons who provide services to the Company and its Subsidiaries, (b) to link compensation to measures of the Company’s performance in order to provide additional incentives, including stock-based incentives and cash-based incentives, to such persons for the creation of shareholder value, and (c) to enable such persons to acquire or increase a proprietary interest in the Company in order to promote a closer identity of interests between such persons and the Company’s shareholders. The Plan is intended to qualify certain compensation awarded under the Plan as “performance-based” compensation under Code Section 162(m) to the extent deemed appropriate by the Committee which administers the Plan.

Capitalized terms used in the Plan and not defined elsewhere in the Plan shall have the meaning set forth in this Section.

In the event of any change in the outstanding Shares by reason of any Share dividend or split, reorganization, recapitalization, merger, amalgamation, consolidation, spin-off, combination or exchange of Shares, repurchase, liquidation, dissolution or other corporate exchange, any large, special and non-recurring dividend or distribution to shareholders, or other similar corporate transaction, the Committee may make such substitution or adjustment, if any, as it deems to be equitable and in order to preserve, without enlarging, the rights of Participants, as to (i) the number and kind of Shares which may be delivered pursuant to Sections 6.1 and 6.2, (ii) the number and kind of Shares subject to or deliverable in respect of outstanding Awards, and (iii) the exercise price, grant price or purchase price relating to any Award. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including cancellation of Awards in exchange for the intrinsic (i.e., in-the-money) value, if any, of the vested portion thereof, substitution of Awards using securities or other obligations of a successor or other entity, acceleration of the expiration date for Awards, or adjustment to performance goals in respect of Awards) in recognition of unusual or nonrecurring events (including events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets) affecting the Company, any Subsidiary or any business unit, or the financial statements of the Company or any Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. Notwithstanding the foregoing, if any such event will result in the acquisition of all or substantially all of the Company’s outstanding Shares, then if the document governing such acquisition (e.g., merger agreement) specifies the treatment of outstanding Awards, such treatment shall govern without the need for any action by the Committee.

APPENDIX B

RYDER SYSTEM, INC.

STOCK PURCHASE PLAN FOR EMPLOYEES

The Ryder System, Inc. Stock Purchase Plan for Employees, also known as “RyderShares” (the “Plan”) is intended to provide an opportunity for Eligible Employees of the Company and its Participating Subsidiaries to acquire ownership in the Company through the purchase of Shares. The Company expects to benefit from the added interest which Eligible Employees will have in the welfare of the Company as a result of their ownership in the Company.

The following capitalized terms used in the Plan have the respective meanings set forth in this Section:

The Plan shall be administered by the Committee, which consists of at least two individuals who are each “non-Employee directors” within the meaning of Rule 16b-3 under the Act (or any successor Rule thereto). The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors and joint owners). Subject to Section 16 of the Act or other applicable law, the Committee may delegate its duties and powers under the Plan to such individuals as it designates in its sole discretion.

During the Offering Period, Participants will make contributions and pay for their Shares under the Plan. The Offering Period shall be the three (3) month period starting each January, April, July, and October. The first Offering Period shall commence on July 1, 1998 (Offering Commencement Date) and end on September 30, 1998 (Purchase Date). Notwithstanding the foregoing, the Committee may change the duration of any Offering Period in its sole discretion.

Any individual who was an active* Employee for ninety (90) days prior to an Offering Period is eligible to participate in the Plan, except for the following Employees:

The Committee shall set forth procedures pursuant to which Participants may elect to participate in a given Offering Period under the Plan.

The Enrollment Period is the period of time during which Participants may elect to participate in an offering. An Eligible Employee may enroll and become a Participant by calling the automated voice enrollment system during the Enrollment Period for the applicable Offering Period for which participation is sought. Properly authorized payroll deductions for a Participant shall commence on the applicable Offering Commencement Date when his/her authorization for a payroll deduction becomes effective and shall end when terminated by the Participant. No Participant shall be permitted to purchase Shares under the Plan (or under any other “employee stock purchase plan” within the meaning of Section 423(b) of the Code, of the Company or any Participating Subsidiary) with an aggregate Fair Market Value (as determined as of each Offering date) in excess of $25,000.00 for any one calendar year within the meaning of Section 423(b)(8) of the Code.

The Purchase Price per Share subject to an offering shall be determined by the Board, in its sole discretion, and shall remain in effect unless modified at least thirty (30) days prior to the applicable Offering Commencement Date, but in no event shall be less than the lesser of:

      (a) Eighty-five percent (85%) of the Fair Market Value of a Share on the Offering Commencement Date; or

      (b) Eighty-five percent (85%) of the Fair Market Value of a Share on the Purchase Date.

      (a) Payroll deductions shall be made on each day that Participants are paid during an Offering Period with respect to all Participants who elect to participate in such Offering Period. The deductions shall be made as a percentage of the Participant’s Compensation in one percent (1%) increments, from one percent (1%) to fifteen percent (15%) of such participant’s Compensation, or a specific dollar amount with a minimum of five dollars ($5.00) per pay period, as elected by the Participant. For any given Offering Period, payroll deductions shall commence on the Offering Commencement Date and shall end on the related Purchase Date, unless sooner altered or terminated as provided in the Plan.

      (b) Subject to Section 12, a Participant may choose to change the rate of payroll deductions at any time. To effect a change in the rate of payroll deductions, the Participant must call the automated voice enrollment system for the change to take effect on the next Offering Commencement Date.

      (c) All payroll deductions made with respect to a Participant shall be credited to his/her Payroll Deduction Account under the Plan and shall be deposited with the general funds of the Company, and no interest shall accrue on the amounts credited to such Payroll Deduction Accounts. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. A Participant may not make any separate cash payment into his/her Payroll Deduction Account, and payment for Shares purchased under the Plan may not be made in any form other than by payroll deductions.

      (d) On each Purchase Date, the Company shall apply all funds then in a Participant’s Payroll Deduction Account to purchase Shares (in whole and/or fractional Shares, as the case may be). In the event that the number of Shares to be purchased by all the Participants in the Offering Period exceeds the number of Shares then available for issuance under the Plan, (i) the Company shall make a pro rata allocation of the Shares available for delivery and distribution in as nearly a uniform a manner as shall be practicable and as the Committee shall determine to be equitable and (ii) all funds not used to purchase Shares on the Purchase Date shall be returned, without interest, to the Participant as promptly as reasonably possible.

      (e) As soon as practicable following the Purchase Date, the number of Shares purchased by each Participant shall be deposited into the Brokerage Account in the Participant’s name. Dividends that are declared on the Shares

held in such account shall be reinvested in whole Shares at the current Fair Market Value in the open market. The Company shall pay the brokerage fees for these purchases. Subject to Section 10(f) of the Plan, dividends on Shares that a Participant holds in a certificate form, will be sent directly to the Participant by the dividend paying agent. The Participant may opt out of this dividend reinvestment program.

      (f) Once the Shares have been purchased, the Participant may (i) transfer his/her Shares to another brokerage account of Participant’s choosing or (ii) request in writing that a stock certificate be issued to him/her with respect to the whole Shares in his/her Plan Broker account and that any fractional Shares remaining in such account be paid in cash to him/her, except that, (1) Participants in Management Levels MS 14-16 may not sell, transfer or request a certificate for one year from the date of purchase and (2) effective January 1, 2005 Participants below Management Level 14 may not sell, transfer or request a certificate for three months from the date of purchase. The Committee may require, in its sole discretion, that the Participant bear the cost of transferring such Shares or issuing certificates for such Shares. Any Participant who engages in a “Disqualifying Disposition” of his/her Shares within the meaning of Section 421(b) of the Code shall notify the Company of such Disqualifying Disposition in accordance with Section 22 of the Plan.

      (g) Participants shall have no interest or voting rights in the Shares until such Shares have been purchased on the applicable Purchase Date.

      (h) All other payroll deductions will be made before deductions under the Plan. If after making these other deductions the Employee’s remaining compensation is less than the deduction under the Plan, no deduction with respect to participation in the Plan will be made for that pay period.

      (i) In the event that a Participant makes a hardship withdrawal of employee deferral (401(k)) contributions under a Code Section 401(k) plan of the Company or an affiliate, such Participant’s payroll deductions and the purchase of Shares under the Plan shall be suspended in accordance with the provisions of such Code Section 401(k) plan. If such a Participant has a cash balance credited to his payroll deduction account at the time of withdrawal that has not already been applied to the purchase of Shares, such cash balance shall be returned to the Participant as soon as administratively possible.

For periods prior to January 1, 2001 only, any Participant may designate a co-owner or joint tenant provided that such person is of legal age in the Participant’s state of residence. The following rules apply to joint accounts under the Plan:

Each Participant may withdraw from an Offering Period under such terms and conditions as are established by the Committee in its sole discretion. Upon a Participant’s withdrawal from an Offering Period, all accumulated payroll deductions in the Payroll Deduction Account shall be returned, without interest, to such Participant, as soon as practicable, and he/she shall not be entitled to any Shares on the Purchase Date thereafter with respect to the Offering Period in effect at the time of such withdrawal. Such Participant shall be permitted to participate in subsequent Offering Periods pursuant to such terms and conditions established by the Committee in its sole discretion.

A Participant shall cease to participate in the Plan upon his/her termination of employment for any reason (including, but not limited to, Retirement or Disability). In such event, all payroll deductions credited to the Participant’s Payroll Deduction Account shall be returned, without interest, to such Participant or to his/her designated Beneficiary, as the case may be, as soon as practicable, and such Participant or Beneficiary shall have no future rights to participate in any future Offering Periods. For periods prior to June 30, 2001, if, upon termination of employment, a participating employee receives severance payments under a severance agreement, payroll deductions under the Plan shall continue until the last day of the severance period.

Upon termination of the Participant’s employment because of death, his/her Beneficiary shall have the right to elect, by written notice pursuant to Section 25 of the Plan prior to the earlier of the Purchase Date or the expiration of a period of sixty (60) days commencing with the date of death of the Participant, either:

In the event that no such written notice of election shall be duly received by the Plan Broker, the Beneficiary shall automatically be deemed to have elected Section 14 (a) of the Plan.

If a Participant goes on a leave of absence, such Participant shall have the right to (a) elect to withdraw from an Offering Period pursuant to Section 12, or (b) remain a Participant in the Plan during such leave of absence.

The Plan shall terminate (a) on the date that all of the Shares for sale under the Plan have been purchased, or (b) at any time, at the discretion of the Committee; provided, however, that no termination shall affect outstanding subscriptions.

The Company, by action of the Board (or a duly authorized committee), may at any time amend the Plan. No amendment shall be effective unless approved by the shareholders of the Company if shareholder approval of such amendment is required to comply with Code Section 423 or to comply with any other applicable law, regulation, or stock exchange rule.

Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to Shares purchased under the Plan:

Neither payroll deductions credited to a Participant’s Payroll Deduction Account nor any rights to receive Shares under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 12 of the Plan.

The purchase of Shares under the Plan shall impose no obligation on the Company or any Participating Subsidiary to continue the employment of a Participant and shall not lessen or affect the Company’s or Participating Subsidiary’s right to terminate the employment of such Participant.

All funds received or held by the Company under the Plan may be used for any corporate purpose.

The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code (or any successor Section thereto). Accordingly, all Participants shall have the same rights and privileges under the Plan, subject to any exceptions that are permitted under Section 423(b)(5) of the Code. Any provision of the Plan that is inconsistent with Section 423 of the Code (or any successor provision) shall, without further act or amendment, be reformed to comply with the requirements of Section 423. This Section 21 of the Plan shall take precedence over all other provisions of the Plan.

(a) Share Issuance: Notwithstanding any other provision of the Plan or any agreements entered into pursuant hereto, the Company shall not be required to issue or deliver any certificate for Shares under the Plan, and Shares shall not be considered to have been purchased notwithstanding the tender by the Participant of any consideration therefor, unless and until each of the following conditions has been fulfilled:

(b) Share Transfers: Shares issued pursuant to the Plan may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of, whether voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, except pursuant to registration under the Act and applicable state securities laws or pursuant to exemptions from such registrations. The Company may condition the sale, assignment, transfer, pledge, encumbrance or other disposition of such Shares not issued pursuant to an effective and current registration statement under the Act and all applicable state securities laws on the receipt from the party to whom the Shares are to be so transferred of any representations or agreement requested by the Company in order to permit such transfer to be made pursuant to exemptions from registration under the Act and applicable state securities laws.

The Participant’s employer shall have the right to withhold from such Participant such withholding taxes as may be required by federal, state, local or other law, or to otherwise require the Participant to pay such withholding taxes. A Participant may elect to pay a portion or all of such withholding taxes by (i) delivery of Shares or (ii) having Shares withheld by the Company from the Shares otherwise to be received. The Shares so delivered or withheld shall have an aggregate Fair Market Value equal to the amount of such withholding taxes.

With respect to Participants who reside or work in Canada, the Committee may, in its sole discretion, amend the terms of the Plan with respect to such Participants in order to conform such terms with the requirements of local law.

All notices and other communications hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or sent by any means of electronic message transmission with delivery confirmed (by voice or otherwise) and will be deemed given on the date on which such notice is received: Ryder System, Inc., Payroll Department, Attn: Director of Payroll, 11690 N.W. 105th Street, Miami, Florida 33178; Facsimile (305) 500-4599.

The Plan shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made and to be performed in the State of Florida.

2990-PS-05

[MAP AND DIRECTIONS]

 

 

 

 

 

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RYDER SYSTEM, INC.

ANNUAL MEETING — MAY 6, 2005

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned hereby appoints Gregory T. Swienton, Tracy A. Leinbach and Robert D. Fatovic, as true and lawful agents and proxies with full power of substitution in each, to represent the undersigned on all matters to come before the meeting and to vote as designated below, all the shares of common stock of RYDER SYSTEM, INC., held of record by the undersigned on March 11, 2005, during or at any adjournment of the Annual Meeting of Shareholders to be held at 11:00 a.m., EDT at the Hilton Miami Airport and Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126 on Friday, May 6, 2005.

COMMENTS or CHANGE OF ADDRESS

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(IF YOU HAVE WRITTEN ON THE ABOVE SPACE,
PLEASE MARK THE CORRESPONDING BOX ON
THE REVERSE OF THIS CARD.)

ON THE REVERSE SIDE OF THIS CARD YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES OR SIMPLY SIGN AND RETURN THIS CARD TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. UNLESS YOU VOTE BY TELEPHONE OR INTERNET, YOU MUST SIGN THIS CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT THE PROXY COMMITTEE MAY VOTE YOUR SHARES.

CONTINUED AND TO BE SIGNED ON
REVERSE SIDE

 

C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694

VOTER CONTROL NUMBER

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THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT

Regardless of whether or not you plan to attend the Annual Meeting of Shareholders, you can be sure your shares are represented
at the Meeting by promptly returning your proxy (attached below) in the enclosed envelope.
Thank you for your attention to this important matter.

If you vote over the Internet or by telephone, please do not mail this card.

x PLEASE MARK VOTES AS IN THIS EXAMPLE.

The Board of Directors recommends a vote “FOR” Proposals 1, 2, 3 and 4.

This Proxy Card will be voted “FOR” Proposals 1, 2, 3 and 4 if no choice is selected.

If you want to vote in accordance with the recommendations of the Board of Directors, simply sign below and return this card.

Change of Address/Comments On Reverse Side ¨

     I hereby authorize the proxy committee, in their discretion, to vote for an alternate director nominee if any nominee listed herein is unavailable, and to use their discretion to vote on any other matters that may be properly presented before the Annual Meeting and at any adjournment of the Annual Meeting.

     Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please note such title.